Employers Push for Same Health-Care Billing Regardless of Site

Employer groups are lining up behind legislation headed to the House floor that would prevent medical groups owned by hospitals from charging more for services than private providers.

The Lower Costs, More Transparency Act (H.R. 5378) includes provisions that would require “site-neutral” payments for drug administration in off-campus hospital outpatient departments. The measure, which has bipartisan support, could come to a vote in the House as early as Monday.

Although the measure only applies to Medicare, employers say site-neutral payments could spill over to reduce costs for commercial plans. They argue the additional fees hospital-owned practices are charging aren’t necessary for services that can be safely performed in a doctor’s office, while hospitals counter that the legislation will lead to reduced oversight and lower quality of care.

“The employer market is typically always affected by what happens in Medicare,” said Jessica Brooks-Woods, CEO of the National Association of Benefits and Insurance Professionals, which represents health insurance brokers. The legislation “would become a tool for the private sector as well to be able to negotiate,” she said.

Site-neutral requirements would save Medicare $3.8 billion over 10 years and lower out-of-pocket costs for patients with cancer and autoimmune diseases, according to the Congressional Budget Office.

Hospital Dollars

Hospital spending is the largest health-care spending category in the US, amounting to $1.3 trillion of the $4.3 trillion in US health expenditures in 2021, according to the Centers for Medicare & Medicaid Services.

Spending on hospital services accounts for 44% of total personal health-care costs for the privately insured, and hospital price increases are key drivers of recent growth in per capita spending in that group, the RAND Corp. reported in a study of hospital prices.

In addition to reducing costs under Medicare and in employer plans, imposing site neutrality could help quell hospital consolidation and acquisitions.

Hospitals are readily buying other hospitals and individual physician practices, said Ilyse Schuman, senior vice president for health policy for the American Benefits Council.

The disparity in Medicare payment policy is “driving” these acquisitions, Schuman said. Because hospital outpatient departments are allowed to charge hospital facility fees, they can charge more overall than physician offices, she said.

“Hospitals can charge more for the same service provided by the same doctor and oftentimes at the same actual physical location. It just has a different name on the door,” she said.

Employers support the site-neutrality bill in Congress because they often peg their payments to Medicare payments, and because the consolidation of hospitals and physician practices “impacts the commercial market too,” she said.

About $847 billion could be saved by employer health plans in the 10-year period from 2024 to 2033 if services performed in medical practices owned by hospitals—such as routine office visits and lab work—were paid at the same rates as independent offices, according to an estimate from University of Minnesota economist Steve Parente.

Savings in both the commercial and individual markets would total $898 billion, according to that estimate.

‘Nothing Neutral’ About It

The American Hospital Association blasted site neutral proposals.

“There is nothing neutral about site neutral—not the level of care, not the patient complexity, and not the enhanced regulatory oversight of hospitals,” Stacey Hughes, AHA executive vice president, said in an email.

“Hospitals offer a higher level of care, treat sicker, older, and lower-income patients and provide emergency services 24/7 to patients regardless of their ability to pay,” and they have greater overhead costs and additional regulatory requirements, Hughes said. “Efforts to expand so-called `site-neutral’ payments threaten hospitals’ ability to maintain access to essential health care services, especially in rural and other medically underserved communities.”

Along with site neutrality, H.R. 5378 would codify Trump administration rules requiring hospitals and health plans to make their negotiated prices for services public.

The measure includes provisions from bills approved by three different House committees. It is primarily sponsored by Energy and Commerce Chair Cathy McMorris Rodgers (R-Wash.), ranking member Frank Pallone (D-N.J.), Ways and Means Chair Jason Smith (R-Mo.), and Education and the Workforce Chair Virginia Foxx (R-N.C.).

Passage would be a “positive step forward in addressing the need for more transparency across health-care stakeholders,” including hospitals, health plans, and pharmacy benefit managers,said Melissa Bartlett, senior vice president for health policy with the ERISA Industry Committee (ERIC), which represents large employers.

The legislation also would require that bills provided by medical offices be coded to show where the services were provided. Hospitals now bill for outpatient services at physician practices they own “as if it was an outpatient service,” increasing patient out-of-pocket costs and costs paid by employer health plans, Bartlett said.

While employer groups support the House measure, they would prefer to see passage of the Senate’s Site-based Invoicing and Transparency Enhancement (SITE) Act (S. 1869), Bartlett said. That bill, which also has bipartisan support, would require full site neutrality of payments for commercial plans as well as for Medicare, and includes the billing provision.

At a recent Senate Finance Committee markup, both Chairman Ron Wyden (D-Ore.) and ranking member Mike Crapo (R-Idaho) expressed support for the SITE Act, which could gain steam in 2024 as employer plans seek solutions to soaring health care costs.

The average per-employee cost of employer-sponsored health insurance rose more than 5% in 2023 to nearly $16,000, and employers expect higher increases to continue in 2024, according to benefits consulting firm Mercer.

Enactment on the SITE Act would be “a huge, huge victory on behalf of Medicare beneficiaries and employers,” Bartlett said.